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Exchange4free Global Forex Report (30/08/2017)

USD

A hot topic of conversation over the last week has been the tension build up between the USA and its allies with North Korea; with the most recent development involving Japan (North Korea fired a missile over Japan). According to North Korean officials, Guam is their next target.

These recent developments have weighed heavily on the USD. A few days ago it dropped to its lowest levels against the Euro in two and a half years. With political tensions easing in the past 24 hours, we have seen the EUR/USD pair lose some of its recent gains. At the time of writing, the pair is trading around 1.1930-1.1940 region.

Investors will now be looking forward to the release of ADP report on the US private sector employment, and the first revision of US GDP print.

EUR

The new darling of investors is still going strong following the Jackson Hole conference, where ECB president Mario Draghi chose not to talk down the EUR, which has gained 14% since the start of 2017. This led to the EUR surge against the USD and GBP amongst many others. The EUR gains against the USD took the EUR to 30 month highs, and the EUR/GBP cross hitting 0.9306, an 8 year high.

With all signs pointing upwards for the European economy, reducing stimulus is now on the cards for the Eurozone, which shows how far the Euro has come from a year ago.

Investors can look forward to German CPI results out later today, where the consensus is for an increase of 0.1%.

GBP

Forecasts for the Pound were downgraded against the Euro in the region of 3-4.5% by J.P. Morgan earlier this week, however upgraded against the USD. The Pound has been the worst performing major currency in the past month, which is partly owed to the expectation that the Bank of England would raise interest rates but failed to do so. The Pound has fallen almost 9% against the Euro since April this year.

While UK Brexit concerns increase, there has been much talk regarding the Pound to Euro hitting parity by next year. According to Brexit secretary David Davis, we can expect more papers to be published over the coming months. This is due to the UK sit down with European Commission to discuss future relationships between the neighbouring countries.

AUD

The Aussie Dollar has continued gaining traction against the USD as of late, but has failed to clear the psychological 0.80, which has led to a fall from its highs.

The Australian gains were boosted by a mild soft tone around the USD, and prevailing positive sentiment around the commodity space.

The modest uptick in US Treasury bond yields was enough to keep a lid on further gains for the AUD/USD pair.

CHF

The CHF touched 2 year lows against the USD yesterday, as the safe haven currency strengthened on the back of recent political developments. Along with gains in fellow safe haven currency the JPY, it was evident that safe-haven demand prevailed.

As the political situation settles, we can see the CHF lose some of its recent gains against the USD, as safe haven flows unwind.

The central bank will be keeping a close eye on CHF pairs, as sustained further Franc appreciation could lead to some action from their side.

ZAR

Despite some rocky ground, it has been a great couple of weeks for the ZAR. We saw the total monthly range on the USD/ZAR cross being less than 50 cents over the past 30 days – quite an achievement for the emotive currency. This, along with SA’s latest inflation figures released last week Wednesday (which revealed that inflation dropped to 4.6% for July) has potentially opened the door for another rate cut from the Reserve Bank this year.

With SA budget and trade data out on Wednesday and Thursday, we could see the ZAR’s defiance to volatility come to an end, as we all know it cannot go on forever.

NGN

July inflation dropped marginally by 0.05ppt from the previous month’s reading, maintaining the rounded rate at 16.1%.

High food inflation deterred a sharper drop in inflation. The Food Index increased by 20.28 percent (year-on-year) in July, up by 0.37 percent points from the rate recorded in June (19.91 percent), which is the highest year-on-year increase in food inflation since 2009.

If it wasn’t for the appreciation of the Naira in both the official and unofficial markets, inflation would’ve reversed its much needed downward trend.

The Naira appreciated against the USD, GBP and EUR on Tuesday, to close the day at 365,475 and 433 respectively.

Exchange4free Global Forex Report (23/08/2017)
Exchange4free Global Forex Report (06/09/2017)

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